Twin Lakes Golf and Country Club v. King County

• Decision Date: 15 April 1976
• Docket Number: No. 43674,43674
• Citation: 87 Wn.2d 1,548 P.2d 538
• Parties: TWIN LAKES GOLF AND COUNTRY CLUB, a Washington nonprofit Corporation, Respondent, v. KING COUNTY, a Municipal Corporation, Appellant.
• Court: Washington Supreme Court

Page 1

87 Wn.2d 1

548 P.2d 538

TWIN LAKES GOLF AND COUNTRY CLUB, a Washington nonprofit Corporation, Respondent, v. KING COUNTY, a Municipal Corporation, Appellant.

No. 43674.

Supreme Court of Washington, En Banc.

April 15, 1976.

Christopher T. Bayley, King County Prosecuting Atty., Seattle, for appellant.

Bogle & Gates, John T. Piper, Seattle, for respondent.

FINLEY, Associate Justice.

This is an appeal from a decision of the King County Superior Court declaring that the plaintiff-respondent's golf course has no taxable 'fair market value' and that certain real property taxes assessed against the golf course and collected under protest by the county must be refunded to the tax-payer.

The dispositive issue is whether the golf course has a 'fair market value' for tax assessment purposes. The property is encumbered with both zoning and conveyancing restrictions regarding use and nonalienation of the realty, and has a history of operating at a substantial, apparently unavoidable, financial loss every year.

On January 1, 1972, the King County Assessor made an assessment regarding the 18-hole golf course owned by Twin Lakes Golf and Country Club for the 1973 tax year. He determined that the golf course had a value of $660,600. The King County Treasurer levied taxes on the golf course in the sum of $16,387.10. The Country Club paid the taxes under protest pursuant to RCW 84.68.020, then unsuccessfully appealed the assessment first to the King County Board of Equalization and then to the State Board of Tax Appeals.

The golf course was constructed and essentially has been operated as an integral part of the Twin Lakes Development, a residential community located in the Federal Way area in South King County. The development is composed of 5 subdivisions which contain 1,006 single-family residential lots, 289 of which are adjacent to the golf course. The realty, I.e., the golf course, subject to the assessment involves no buildings or structures. It includes an irrigation system but otherwise consists solely of fairways, greens, and sand traps and is surrounded by homes in the development.

Four of the subdivisions, together with the golf course, were developed and constructed as a planned unit development (PUD) pursuant to the King County zoning code. To obtain PUD zoning, the developer was required to set aside and reserve certain lands for 'common open space' as required by the King County zoning code. ¹ The King County Council approved the developer's request and zoned four of the subdivisions, including the golf course, as a PUD. The ordinances adopted by the county required the developer to construct a golf course on the realty and to reserve it for common open space and golf course use for the benefit of the lot owners in the development.

The developer, prior to conveying the lots, filed with the King County Auditor a declaration of covenants, conditions and restrictions which provided that each lot owner would have the right to use and enjoy the golf course. The covenants provided that the restrictions were to run with and bind the land for a period of 20 years and automatically were renewed for 10-year periods unless 75 percent of the lot owners terminated the covenants. The deeds given by the developer to lot purchasers referred to the covenants and with each deed purchasers of a lot acquired the right to become a member of the golf club and to use the golf course. The deeds also referenced certain plat maps. The plat maps were recorded by the developer for all five subdivisions and indicated that the property would remain 'open space' land free of buildings and other structures.

The Twin Lakes Golf and Country Club was incorporated in 1966 and since then consistently has incurred losses from the operation of the clubhouse, the golf course, and other club facilities. Primarily as a result of the club's lack of income and because of a lack of data on comparable sales of golf courses, the assessor computed and determined the value of the realty by the cost approach, I.e., cost of reproduction, appraisal method. This method is used by the assessor in valuing all other golf courses in King County, Washington. In computing the value of the golf course, the assessor made no reduction in valuation relative to the restrictions upon the use of the realty created by PUD zoning or the protective covenants or by the recorded plat maps. In the assessor's opinion, these restrictions did not affect the value of the realty.

The trial court found and concluded: (1) These restrictions encumbered the property and made the realty a servient estate...